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The GoldBugg Report - August 05, 2008

August 5, 2008

-"With a weaker dollar and continuing and possibly worsening inflation in prospect worldwide, the bullish case for Precious Metals remains unchanged and therefore silver is regarded as a buy at current levels and on any further short-term weakness, which is likely to be limited due to the strength of nearby support." Clive Maund

-"We're never going to see $850 gold again or be this close to it, so now is the time to buy." James Turk

-TSX Forecast Cut-Surviving The Storm-Stock Market

GOLD

-Gold market update from Clive Maund. The US Fed and the US government have made it clear with their recent actions in respect to Fannie and Freddie, and before that Bear Stearns via J P Morgan, that the largest hogs will be able to push their snouts squarely into the trough, so that their ears are flapping above their eyes, assured that the faucet will be kept wide open with a limitless supply of electronically created feed.

In other words, if they are big enough to bring down the system down should they fail, they will be hooked up to the "taxpayer life-support system", socialist style, regardless of whether they end up nearly killing their hosts. This is what is meant by the term "too big to fail". What this must inevitably mean is a lot more dollars flying around, as if there aren't enough already, and alot more inflation, neither of which are renowned for causing the price of gold to fall. Read and see charts here-http://news.goldseek.com/CliveMaund/1217199390.php

-Gold options point to $1,200. Heavy bets in deep out-of-the-money calls and other bullish plays in the gold options market indicate that bullion has a shot at rallying to an all-time peak of $1,200 an ounce by the end of the year.

Gold has soared furiously a few years ago the metal was trading at $250 an ounce as investors poured into the market due to inflation fears, a weakened dollar, and market turmoil. "There are a lot of people who think that by the end of the year we'll be trading $1,200 to $1,500. They are not very expensive options, so people are buying them," said John Bilello, COMEX gold options floor trader.

Bilello said that many option investors were currently adjusting positions after gold's sharp fall but he saw recent strong volume of December $1,000 calls, bull call spreads between $1,200 and $1,300, and the selling of put options all of which are betting that gold will rise further. A bull call spread involves buying a lower strike price call and selling a higher strike price call, and profits are maximized when prices rise above the higher strike price. Read more here-http://www.gata.org/node/6452

-Is gold's big season in sight? Analysts at RBC Capital Markets look for gold bullion to consolidate, and then make another run at $1,000 an ounce in September-October 2008. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=58021&sn=Detail

-Gold council set to launch ETF in Dubai. Read more here-http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2008/August/business_August13.xml&section=business&col=

-Biggest gold ETF lists today on Hong Kong stock exchange. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=58322&sn=Detail

-More jewellery, gold converted into cash High price and slow economy turn owners into sellers. Read more here-http://www.columbusdispatch.com/live/content/business/stories/2008/07/30/old_gold.ART_ART_07-30-08_C8_AQASMT8.html?sid=101

SILVER

-Silver market update from Clive Maund. With a weaker dollar and continuing and possibly worsening inflation in prospect worldwide, the bullish case for Precious Metals remains unchanged and therefore silver is regarded as a buy at current levels and on any further short-term weakness, which is likely to be limited due to the strength of nearby support. Read and see chart here-http://news.silverseek.com/CliveMaund/1217199530.php

-Confessions of a Silver Optimist. Read more here-http://news.goldseek.com/RichardDaughty/1217311320.php

-Silver and Monetary Considerations. Read more here-http://news.silverseek.com/SilverInvestor/1217482877.php

-Ted Butler silver commentary. Big news recently is the world record loss in crude oil trading, taken by SemGroup, of Tulsa, Oklahoma, a large but mostly unknown oil pipeline, storage and trading company founded in 2000. To my knowledge, the reported $3.2 billion loss is the second largest commodity debacle ever, only behind the $6 billion loss recorded by Amaranth Advisers two years ago in natural gas.

What is remarkable is how little has been written about SemGroup's loss. I realize that we have become numb to reports of multi-billion dollar losses, thanks to the mortgage and credit disaster. But it is still amazing to me that more attention has not been placed upon this oil trading loss, because it explains so much about the recent volatility in the price of oil. If there's one concern ahead of the mortgage and credit crisis, it has to be the price of crude. Read more here-http://news.silverseek.com/TedButler/1217265595.php

-Physical silver outperforms silver stocks. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=58141&sn=Detail

-Precious metals summer doldrums. If your expectations are properly set heading into summer, then you won't suffer any psychological damage from the typical lackluster grind. Prudent PM investors and speculators write off most of the summer, accepting the near inevitability of the drift. Then in late August they start buying aggressively in anticipation of the usual autumn gold rally driven by Asian buying.

Most of these PM bulls' gains have accrued between September and February, the highest-probability-for-success time to be long. The bottom line is the precious-metals realm virtually never does well during the summer months, even within the strongest of secular bulls. For a variety of global supply-and-demand reasons, gold tends to drift sideways in June, July, and August. Since gold's behavior heavily colors sentiment for everything PM-related, silver and the PM stocks parallel the yellow metal in lackluster summer consolidations.

But if you expect these PM summer doldrums, and trade accordingly, you can be really well-positioned for the big autumn rallies spawned by a surge in gold buying out of Asia. Managing one's PM summer expectations down to low levels is crucial for PM traders' psychological well-being during these slow months. Thankfully this slowest time of the year seasonally is followed by the best seasonal time. Adam Hamilton-Read more here-http://www.zealllc.com/2008/pmdold.htm

PLATINUM-PALLADIUM

-Platinum faces near term pressure, but has support for the long run. Platinum prices could come under more pressure as the slowing global economy threatens to curb consumption of the precious metal, which is heavily reliant on a healthy car industry to sustain demand.

But, analysts said, prices will be firmly supported over the longer term by a persistent supply deficit, as output from South Africa, which produces 80 percent of world supply of the metal, continues to suffer from power constraints. Read more here-http://www.iht.com/articles/2008/07/30/business/invest.php

DEFINITIONS-QUOTES-QUICK HITS

-Write-Down. Reducing the book value of an asset because it is overvalued compared to the market value. This is usually reflected in the company's income statement as an expense, thereby reducing net income. Investopedia.com

-"In this present crisis, government is not the solution to our problem, government is the problem. It's no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government." Ronald Reagan

-Last Wednesday, the U.S. House passed a bill that essentially creates another $800 billion worth of U.S. dollar funny money out of thin air by raising the national debt ceiling to $10.6 trillion from $9.815 trillion. James West-Read more here-http://news.goldseek.com/GoldSeek/1217259929.php

-"We're never going to see $850 gold again or be this close to it, so now is the time to buy." James Turk

-Gold loves inflation. As you know, inflation is great for gold and the other precious metals. In fact, the overall environment couldn't be better for metals, resources and energy looking out to the years ahead. That's why we've consistently recommended buying and holding for the long-term. Even though these markets will be volatile, moving up and down, by riding this mega uptrend over the long haul you'll do very well. Aden Sisters-Read more here-http://www.kitco.com/ind/Aden/aden_jul252008.html

-Other reasons why gold is rising. Then there's the ongoing government spending, which isn't going to change either and that too is one of the primary factors fueling inflation. Massive spending means more money is needed, and more money means more inflation. Again, it's that simple. Currently, the U.S. is in debt to the tune of over $500,000 per household, taking future liabilities like Social Security into account.

The defense budget is at a post World War II record, and the list goes on. These are the fundamental, primary reasons propelling prices, inflation and gold higher, and the housing rescue bill will provide an even more solid base for the long-term bull market in gold. Aden Sisters

-The Fed is flooding the market with nearly a trillion dollars of liquidity, which is why I believe gold under $1,200 an ounce and silver under $30 an ounce are bargains. Gold and silver should peak and decline before 2020, completing two 20-year cycles. My exit is to sell silver around 2015. I plan to hold onto gold, income-producing real estate, oil wells, and stocks.

Robert Kiyosaki-Read more here-http://finance.yahoo.com/print/expert/article/richricher/95198

-I stated that it was time to sell all nonperforming real estate. My market indicator? A checkout girl at the local supermarket, who handed me her real estate agent card. She was quitting her job to become a real estate professional. Robert Kiyosaki

-During my trip to China, I had an opportunity to speak to several high level executives of a global investment company. After I finished talking about the global demand and supply factors that would push commodity prices higher, they asked me a question that shocked me. In short, they wanted to know some "other factors" for rising commodity prices. They already knew the basic supply/demand story for rising commodity prices, but it seemed that the story was getting quite old and boring. They wanted to hear something different and exciting.

Unfortunately for them, the reasons for why oil is eventually going to be above $200/barrel, why gold prices will reach over $2000/ounce, and why the commodity bull market has at least another 5 years of upward movement remain the same. There is no new exciting development to report. And if investors have not quite yet grasped the magnitude of this commodity bull market, they probably never will. As for me, I continue my longer-term view of higher commodity highs. Emanuel Balarie-Read more here-

http://www.321gold.com/editorials/balarie/balarie072808.html

-Smart money remains risk averse and the wise old market adage to "never catch a falling knife" has never been more appropriate. The collapse of the world trade talks in Geneva is another bearish factor confronting the already slowing global economy and has serious ramifications for both the developed and developing world economies. Gold.ie-Read more here about trade talks-http://news.bbc.co.uk/2/hi/business/7531099.stm

-"What has suffered most is the credibility of the most sophisticated financial systems in the world." "It is both the credibility and viability of the most sophisticated financial system that is at stake now as most of this financial and banking system is on its way to substantial and formal insolvency and bankruptcy." Mohamed El-Erian co-CEO of Pimco

-"I am officially scared," GMO investment manager Jeremy Grantham told professionals from as far away as Abu Dhabi and Malaysia. "In 2000, we had a technology bubble. But this is massive, a massive credit crisis and a bubble in global housing, global equity and global land." He confessed to the group that "I bought my first gold last week, and I hate gold.

It doesn't pay a dividend. I would only do it if I was desperate." When asked by a money manager what he would buy now, Grantham said, "long mattresses" jesting about the stereotypical nervous behavior of hoarding cash. He seriously suggested: "Put money into something incredibly safe. Read more here-http://www.chicagotribune.com/business/yourmoney/chi-tue-gail-jul29,0,1843564,print.column

-Grantham Reverses Call, Says Emerging Markets Now Too Risky. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aiOrSeRIBCPw

-John Williams, an economic consultant who publishes the monthly newsletter "Shadow Government Statistics," calculates that "inflation is actually running at an annualized rate of 9.95 percent in the U.S." Gold.ie

-Sir John Major, the ex Prime Minister of the UK says that inflation in the UK is running at multiples of the official government figures and he believes inflation is actually at over 10%. Just two weeks ago Major warned that true annual rate of inflation is as much as 10 per cent and that changes to the way inflation is calculated had been "extremely misleading", with increasing food prices and heating bills not reflected by the official statistics on the cost of living. Gold.ie

-The Fed's rate dilemma. Interest rates likely on hold for a while as worries about economic weakness and inflation leave central bank with few good options. Read more here-

http://money.cnn.com/2008/07/31/news/economy/fed_outlook/index.htm?postversion=2008073116

-Juice economy again? It's a tough call. Top Democrats are calling for more measures to stimulate the economy. But experts say it's too soon to tell whether another round of stimulus is a good idea. Read more here-http://money.cnn.com/2008/07/31/news/economy/stimulus2/index.htm

-U.K. Beer sales 'lowest since 1930s'. Rob Hayward, chief executive of the British Beer and Pub Association, said: "Beer sales in pubs are now at their lowest level since the Great Depression of the 1930s down seven million pints a day from the height of the market in 1979." An ongoing decline has been steepened by tightened spending, the group said. Read more here-http://news.bbc.co.uk/2/hi/uk_news/7528858.stm

RARE COLOURED DIAMONDS

-World rough diamond production is likely to drop by 10 million carats to 138 million carats in 2008 but an average 13% price increase should boost the total sales value to US$14.3bn from $12.6bn in 2007.

That's according James Allan of corporate finance advisory firm Allan Hochreiter who said the main drop would come from Australia where production will be 6 million carats down this year with Canada showing a 2 million carat drop. Russia and Botswana will both show drops of one million carats while South African production would be 0.3 million carats lower. Read more here-http://www.miningmx.com/diamonds/686521.htm

-Diamonds Attract Funds as Largest Gem Prices Surge 76% in Year. Diamonds, like art, are a commodity that is gaining attention as an alternative investment. Increases in the price of the rarest colorless and colored diamonds are attracting wealthy investors and structured funds as stock markets and real-estate values decline. The price of 5-carat gems with the potential to be sold at $1 million or more has risen 76.5 percent in the year to May 2008, according to Idexonline.com, the Web site of the International Diamond and Jewelry Exchange.

"There's a group of very savvy, tremendously wealthy people who have put a small portion of their fortunes aside to invest in diamonds,'' said Francois Graff, managing director of London- based Graff Diamonds International, in a telephone interview. ``They've made incredible returns.'' Five years ago, dealers were paying $70,000 per carat for colorless diamonds of 10 carats and more, said Graff. "Now we're paying over $200,000 per carat,'' he said. There are only about 200 highest-grade, D-flawless colorless diamonds of more than 5 carats discovered per year, according to Raymond Sancroft-Baker, Christie's International's European director of jewelry.

The annual yield of large-scale blue and pink stones is considerably smaller. "Diamonds are getting rarer. The earth just isn't giving them up,'' said Sancroft-Baker in a telephone interview. The commodity asset-management firm Diapason Commodities Management SA listed a specialist investment fund, Diamond Circle Capital Plc, on the London Stock Exchange on June 25. Full story here-http://www.bloomberg.com/apps/news?pid=20601093&sid=aKVjxYejpss0&refer=home

-Super-rich still pay dear for rare diamonds. The rapid rate of increase in wholesale prices of rare polished diamonds is unsustainable, but for now the growing number of super-rich are paying rising prices for top-tier diamond jewelry. Charles Wyndham, founder of PolishedPrices, a leading index of wholesale diamond prices, said on Friday prices of larger, rare, near-flawless gemstones had shot up by roughly 200 percent over the past 18 months. Read more here-http://www.reuters.com/article/newsOne/idUSL0416926920080705

-Demand for rarest diamonds outstrips supply. Read more here-http://www.reuters.com/article/reutersEdge/idUSL0646558820080606

OIL

-CIBC dismisses recent dive in oil prices as mere trifle. CIBC World Markets says oil prices will resume their uptrend, despite the commodity's 15% drop from a peak of above US$147 on July 11. Jeff Rubin, chief economist at CIBC World Markets, has been one of the Street's biggest oil bulls forecasting it would hit US$150 by 2010 and US$200 by 2012 on a wave of emerging market demand and a shrinking supply of politically stable sources. Read more here-

http://network.nationalpost.com/np/blogs/fpposted/archive/2008/07/25/cibc-dismisses-recent-dive-in-oil-prices-as-mere-trifle.aspx

-Iran says oil could reach $500 on dollar, politics. Iran's OPEC governor said world oil prices could reach as high as $500 per barrel in a few years' time if the dollar falls further and political tension worsens, an Iranian weekly said.

"If the dollar's value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500," Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday. He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years. Read more here-

http://news.yahoo.com/s/nm/20080726/ts_nm/iran_oil_price_dc_2&printer=1;_ylt=Aml2Ne.aD7zTKPw7OVEOfCVg.3QA

-Hayward Sees Oil, Gas Prices Staying `Stronger,' Telegraph Says. Tony Hayward, chief executive officer of BP Plc, said the long-term trend for gas and oil prices is likely to cause difficulties for consumers, the Daily Telegraph reported. He said there was ``an increasing likelihood that oil and gas prices will be stronger for longer,'' according to the newspaper, citing Hayward speaking yesterday.

While earlier this year the CEO said the era of cheap energy was at an end, yesterday he said events are ``playing out even faster than any of us expected,'' according to the Telegraph.

Separately, BP rejected suggestions it may sell its alternative energy unit, run by Vivienne Cox, or arrange to sell shares in the division, the newspaper said. Bloomberg

-OPEC chief: Oil prices may fall to $70. Read more here-http://www.chinadaily.com.cn/world/2008-07/27/content_6880213.htm

GASOLINE

-Why Does Gasoline Cost So Much? Gas prices are a product of supply and demand. This article attributes recent gas price increases to stagnant oil supplies and growing global demand from emerging Asian economies not speculators. Additional shocks to the U.S. refining capacity further tightened gas prices in the U.S. These forces will likely keep gas prices high for the foreseeable future. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=44879

-U.S. Motorists Cut Driving in May for Seventh Month. U.S. motorists, paying record prices for gasoline, drove less in May for a seventh consecutive month, the Federal Highway Administration said. Vehicle-miles traveled fell 3.7 percent from a year earlier, the Washington-based agency said in a report today.

The 9.6 billion-mile decline came in a month in which the average U.S. retail gasoline price reached a then-record of $3.98 a gallon on May 31, according to motoring group AAA. The price rose as high as $4.11 on July 15 before sliding to $3.96 this week. The north central U.S., which includes Chicago, had the biggest percentage drop in driving, down 4.5 percent. Travel fell in all five regions for which the agency reports results. Bloomberg

-Fuel Subsidies Overseas Take a Toll on U.S. To understand why fuel prices in the United States have soared over the last year, it helps to talk to the captain of a battered wooden freighter here. He pays just $2.30 a gallon for diesel, the same price Indonesian motorists pay for regular gasoline. His vessel burns diesel by the barrel, so when the government prepared for a limited price increase this spring, he took to the streets to protest.

"If the government increases the price of fuel any more, my business will collapse totally," said the boat captain, Sinar, who like many Indonesians uses only one name. From Mexico to India to China, governments fearful of inflation and street protests are heavily subsidizing energy prices, particularly for diesel fuel. But the subsidies estimated at $40 billion this year in China alone are also removing much of the incentive to conserve fuel. Read more here-http://www.nytimes.com/2008/07/28/business/worldbusiness/28subsidy.html?_r=2&oref=slogin&partner=rssyahoo&emc=rss&pagewanted=print

INFLATION

-Inflation in Europe reported at 16-year high. Inflation in Europe accelerated to the fastest pace in more than 16 years in July, restricting the European Central Bank's room to bolster the economy even as unemployment starts to increase.

The inflation rate for the 15-nation euro region rose to 4.1 percent from 4 percent in June, the European Union statistics office in Luxembourg said today. The rate, the highest since April 1992, matched the median estimate of 36 economists in a Bloomberg News survey. A separate report showed unemployment was 7.3 percent in June, exceeding the 7.2 percent median forecast. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=afAiVyGGAmpM&

-U.S. inflation to hit 6%. Heavily subsidized energy in the Middle East will help drive the inflation rate in the United States to 6 per cent within six months, and prompt the U.S. Federal Reserve Board to go on a rate-hiking frenzy, CIBC chief economist Jeff Rubin predicts. Despite the recent fall in oil prices, U.S. gasoline prices will resume their rise because of unabated demand for energy in OPEC countries, Mr. Rubin argues.

"As more and more of OPEC's oil is diverted to meet soaring power demands throughout the Middle East, American pump prices will continue to rise," he says in his most recent paper that examines the consequences of his forecast for rising oil prices.

"From the world's largest indoor ski hill in Dubai, to the world's largest desalination plants in Saudi Arabia, dirt cheap energy makes anything possible in the Middle East today." He predicts that oil will end the year at about $130 (U.S.) a barrel, rising to the $150 range next year, despite a drop in U.S. demand for gasoline. Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20080730.wcibcrubin0730/GIStory/

-As costs rise, inflation's next front is retailers. Coming to a store near you: Even higher prices. Most inflation this year has come from food and fuel, as retailers resisted passing along to strapped consumers the higher prices manufacturers charged them, but coming increases from companies such as Johnson & Johnson and Hasbro Inc. may leave them with no choice.

"While these increases have not for the most part been passed on at the retail level, it is inevitable that they will be at some point," said Dean Baker, co-director of the Center for Economic and Policy Research. "Car dealers and other retailers cannot continue to absorb rising costs at the wholesale level and not pass some of these increases on to consumers."

Sherwin Williams Co. on July 17 announced its third price increase in eight months. The company has been having "difficult discussions" with retailers, Chris Connor, chairman and CEO, said on its quarterly conference call. The price increases are "well supported with facts in terms of why the company needs them," he said. "Our customers, to the best of their ability, are passing them on." Read more here-http://www.gata.org/node/6455

-Zimbabwe knocks 10 zeros off currency. Central bank devalues currency in bid to fight hyper-inflation. Zimbabwe's central bank governor says he is knocking 10 zeros off the country's hyper-inflated currency to make 10 billion dollars become one dollar.

Zimbabwe suffers the highest inflation rate in the world. Governor Gideon Gono says that high rate is constraining operations of the country's computer systems. Computers, electronic calculators and automated teller machines at banks have not been able to handle basic transactions in billions and trillions of dollars.

Just last week Gono introduced a new 100 billion-dollar note that is not enough to buy a loaf of bread. Gono said on Aug. 1 the bank will issue a 500-dollar bill equivalent to 5 trillion dollars at the current rate. Cnnmoney.com-Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20080730.wzimbabwe0730/GIStory/

U.S. RECESSION

-U.S. May Be in `Very Long' Recession, Harvard's Feldstein Says. The U.S. may now be in a ``very long'' recession that will drive the unemployment rate higher, with little that the Federal Reserve can do to help, said Harvard University Professor Martin Feldstein.

"I don't see recovery'' on the horizon, Feldstein, who headed the National Bureau of Economic Research until June and serves on the group's recession-dating panel, said in an interview with Bloomberg Radio. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=azUho7KDltW4

-Where Is the Economy Going in the Next 6 Months? While history may find we are too pessimistic at this point in time, in our view it is far better to prepare for a worsening crisis and hope that it does not materialize, than to expect business as usual. Bud Conrad-Read more here-http://www.321gold.com/editorials/casey/casey072508.html

Short Term Projections.

1. The housing decline is not yet done, because we will need another year to unwind foreclosures in the pipeline. In addition, the exuberance shown by appraisers at the height of the housing bubble still has a long ways to go to fully deflate. What is that house on the market down the road really worth? At this point, no one knows... and no one will know until it and many others are bought by willing buyers (as opposed to unwilling lenders taking them onto their books in a foreclosure).

2. Consumers in the U.S. are not able to expand credit and are increasingly concerned about the outlook for the economy, so they will slow spending both at home and on imports.

3. The financial/banking system is weaker than understood. The complexity of the global system and the ubiquitous presence of interlocking financial and credit instruments and literally trillions of dollars in derivatives has left the world's banks teetering on the edge.

Adding a push from behind, we have broadly rising inflation and soon the persistently higher interest rates that are the bane of fixed-income investors and financial institutions in general. As the dollar continues its fall, and the banks continue to come under pressure, the lack of confidence in these keystones of the modern financial system will deepen. Already, the Sovereign Wealth Funds that rushed in early in the credit crisis to prop up the big investment houses are now signaling that, at least for the time being, they are going to step back and watch how things shake out.

4. A slowing economy recession coupled with inflation, creates a condition often referred to as stagflation, presenting much bigger policy challenges for the government than one or the other alone.

5. The food crisis. Shortages of food production come from rising energy and fertilizer costs. Rising demand comes from a shift in diet, especially in emerging markets, where increasing prosperity leads the citizenry to add more protein to their diets. Important shortages in grains have arisen that don't allow for a bad crop year. Most concerning is that these shortages are occurring despite good crop production last year, an occurrence that can be blamed, in part, on the diversion of some agriculture production for ethanol and bio-diesel.

These food shortages have already contributed to a doubling and tripling in the price of grains over the last two years. But even these elevated prices have not been sufficient to offset the higher costs of the energy required to produce the crops. And, despite today's higher prices, agriculture still lags the price increases seen in many other commodities.

-U.S. Recession May Have Begun in Last Quarter of 2007. The U.S. economy may have slipped into a recession in the last three months of 2007 as consumer spending slowed more than previously estimated and the housing slump worsened, revised government figures indicated.

The world's largest economy contracted at a 0.2 percent annual pace in the fourth quarter of last year compared with a previously reported 0.6 percent gain, the Commerce Department said today in Washington. Growth for the period from 2005 through 2007 was also trimmed. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=axADxPkA6IA8&refer=home

-U.S. Economy: Growth Fell Short of Forecasts in Second Quarter. The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than many investors and analysts had thought. "We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. "It's going to widen, it's going to deepen.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aAa5DTryVKLc&refer=home

-U.S. banks sharply reduce business loans. Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.

Two vital forms of credit used by companies commercial and industrial loans from banks, and short-term "commercial paper" not backed by collateral collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001. Read more here-http://www.iht.com/articles/2008/07/28/business/28credit.php

-Brazilian President Lula: United States made a casino of its economy. The President of South America's largest economy, Brazil's Luiz Inacio Lula da Silva accused the United States and others of making "a true casino" out of their economies, during an official two-day visit to Colombia over the weekend, leading Argentine daily Clarin reported.

Lula was addressing an estimated 1,000 Colombian and Brazilian businesspeople in Bogota when he said that many of the world's recent problems including rising food prices were caused more by the international crisis than by issues inherent to the economies of the region. Lula blamed "the few banks and rich countries that made a true casino of their economies, as was the case of the sub-prime [mortgage] crisis in the United States."

He said the weight of this international crisis should therefore not fall "on our shoulders" and demanded that international financial institutions do something. "Otherwise we run the risk of frustrating the dreams of growth and development of countries such as Argentina and others," he was quoted as saying. Story here-http://news.bn.gs/article.php?story=20080722112611304

-Restaurant Chains Close as Diners Reduce Spending. Read more here-http://www.nytimes.com/2008/07/30/business/30restaurant.html?_r=1&oref=slogin&ref=business&pagewanted=print

-Bennigan's, Steak-and-Ale Chains Seek Bankruptcy. Bennigan's and Steak-and-Ale restaurant chains, owned by Metromedia Restaurant Group, sought permission to liquidate under bankruptcy court protection. The chains listed assets totaling as much as $550 million and debt of as much as $150 million on 38 separate Chapter 7 petitions filed today in U.S. Bankruptcy Court in Sherman, Texas. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=apX7FLLJ1Scg

U.K. RECESSION

-Fears of recession grow as Britons stop spending and sales slump. Read more here-http://business.timesonline.co.uk/tol/business/economics/article4393541.ece

-Nationwide warns of recession as house price drop doubles. Nationwide, the UK's biggest building society, today gave warning that a recession could be on the way after the average house price in the year to July plunged to a three-year low of £169,316.

The average price of a home is now £15,000 lower than in July last year, after prices declined by 8.1 per cent - the fastest decline since 1991 during Britain's last recession. Read more here-http://www.timesonline.co.uk/tol/money/property_and_mortgages/article4433925.ece

U.S. DEBT GROWS

-U.S. Deficit to Hit Record $490 Billion in 2009, Official Says. The U.S. budget deficit will increase to a record of about $490 billion in fiscal 2009, an administration official said, leaving deep budget problems for a new president. The projected deficit for the spending year that begins Oct. 1 is far higher than the $407 billion forecast by President George W. Bush in February.

The official also confirmed a report in USA Today that the deficit this year will be less than the $410 billion estimated in February. The deficit for next year may reflect an economic slowdown and the cost of payments distributed under the $168 billion economic stimulus package. A Bloomberg survey of 28 analysts completed July 25 showed the average estimate for the deficit at $447 billion next year and $407 billion this year. Bloomberg

-U.S. Borrowing to Rise to $171 Billion This Quarter. The U.S. Treasury predicted it would borrow 53 percent more this quarter than initially forecast as increases in spending and sluggish economic growth swell the budget deficit. Borrowing needs will rise to $171 billion in the three months to Sept. 30, $59 billion more than predicted in April, the Treasury said in a statement in Washington. That total, if realized, would be the second-largest ever after a record $244 billion was borrowed in the first three months of this year.

After improving for three straight years, the U.S. budget is deteriorating as a slowing economy hurts tax revenue and spending increases. The Bush administration, which entered office in 2001 with a $127 billion budget surplus, earlier today predicted the next president faces a record deficit totaling $482 billion in 2009. "The economic slowdown and increased expenditures associated with slower growth and with the stimulus has had an effect on the federal budget,'' Phillip Swagel, the Treasury's assistant secretary for economic policy, said in a statement.

In the final three months of the year, the Treasury said borrowing would reach $142 billion. The Treasury predicted three months ago it would pay down $35 billion in marketable debt in the April-June quarter and have a cash balance June 30 of $45 billion. While the government often runs a surplus in the second quarter as individuals pay annual income taxes by the April 15 deadline, that didn't happen this year. Bloomberg

-Paterson: State Deficit Up $1.4B Over Last 90 Days. Governor Says Damage On Wall Street 'Infecting' State. Special Legislative Session Called For Aug. 19. New York Governor David Paterson says the New York state budget deficit has gone up $1.4 billion in the last 90 days. The governor delivered the troubling economic news during a live broadcast message shortly after 5 p.m. Tuesday. Read more here-http://wcbstv.com/cbs2crew/david.paterson.budget.2.782422.html

-The Grand Summary: Our Empire of Debt Is Collapsing. Read more here-http://www.oftwominds.com/blogjuly08/empire-debt7-08.html

CREDIT CRISIS-BONDS

-More Than a Helping Hand. One of the basic functions of a central bank is to act as the 'lender of last resort'. This facility is used to keep banks liquid during a period of distress. For example, if a bank is experiencing a run on deposits, it will borrow from the central bank instead of trying to liquidate some of its assets to raise the cash it needs to meet its obligations.

In other words, the central bank offers a 'helping hand' by providing liquidity to the bank in need. The following chart is from the Economic Research Department of the St. Louis Federal Reserve Bank. Here is the link: http://research.stlouisfed.org/fred2/series/BORROW. This long-term chart illustrates the amount of money banks have borrowed from the Federal Reserve from 1910 to the present. James Turk-Read more here-http://goldmoney.com/en/commentary.php

-Fed Extends Emergency Loan Programs Through January. The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still too weak to go without a backstop from the central bank. The Fed also plans to give securities dealers options for tapping one of the loan programs to ensure financing through the ends of quarters, when funding needs can jump.

Commercial lenders will be able to borrow from the central bank for a longer period, and the Fed boosted its swap line with the European Central Bank. Today's announcement reflects continued turmoil in financial markets, after three U.S. banks failed in as many weeks. It's the latest step in officials' efforts to combat the yearlong credit crisis, after the Fed's rescue of Bear Stearns Cos. in March and the Treasury's backstop plan for Fannie Mae and Freddie Mac this month.

"The U.S. is pulling out all the stops here to make sure we don't have a terrible downturn or a collapse in the financial system,'' said Allen Sinai, chief global economist at Decision Economics in Boston. "There isn't anything else the Federal Reserve can do but to keep pumping liquidity into the system.'' Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=alHyxZMMFKAw&refer=home

-Fed auctions another $75B in loans. Central bank says commercial banks paid 2.35% for 28-day loans, in the latest auction to assist banks gripped by credit problems. Read more here-http://money.cnn.com/2008/07/29/news/economy/fed_auction.ap/index.htm

-Foreign treasuries just starting to notice U.S. debt catastrophe. Last Thursday the Kuwait Investment Authority, the world's sixth-biggest sovereign wealth fund, received a call from the US embassy to reassure them that bonds issued by Fannie Mae and Freddie Mac were sound, according to one person with knowledge of the matter. The call came after Kuwait's minister of finance announced that the KIA was not planning to invest in Fannie Mae and Freddie Mac debt in future. Read more here-http://www.gata.org/node/6449

-Merrill Sells $8.55 Billion of Stock, Unloads Money-Losing CDOs. Merrill Lynch & Co., the third- biggest U.S. securities firm, sold $8.55 billion of stock and will liquidate $30.6 billion of bonds at a fifth of their face value to shore up credit ratings imperiled by mortgage losses. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6IfH7HIhBmg&refer=home

-US credit crisis spreads to wealthier. The US financial crisis is spreading from subprime borrowers, with evidence mounting that more affluent people are failing to pay mortgages and credit card balances. Growing concerns over the financial health of richer borrowers are prompting banks and card issuers to tighten lending practices in moves that could further damp consumer confidence.

Banks such as JPMorgan Chase and credit card groups such as American Express have clamped down on lending to customers who have traditionally been seen as among the safest and most profitable borrowers. "The crisis is just starting to spread beyond the middle class," said Curtis Arnold, founder of CardRatings.com. "Even folks with good credit-ratings scores are [not] immune from adverse actions from their card -issuers." Read more here-http://www.ft.com/cms/s/0/51b8f5be-5d05-11dd-8d38-000077b07658.html?nclick_check=1

-McCain Says Wall Street `Villain' in Subprime Crisis. Senator John McCain put the blame on Wall Street for the home mortgage credit crisis that has roiled financial markets around the world. "Wall Street is the villain in the things that happened in the subprime lending crisis and other areas where investigations and possible prosecution is going on,'' McCain said during a taped appearance on ABC's ``This Week'' program. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVLF68kNBUgA

-Pain in Spain Falls Mainly on Trichet with Toxic Debt. Spain's housing collapse is becoming European Central Bank President Jean-Claude Trichet's economic crisis as delinquent home-loans rise amid a slowing economy.

Spanish lenders, once the most prudent on the Continent, have almost tripled borrowings from the Frankfurt-based ECB in the past year to 47 billion euros ($74 billion), pledging bonds backed by assets, including mortgages, as collateral. That's the fastest increase in Europe, overtaking Italy, Ireland and the Netherlands, according to data from the countries' central banks.

"There are some worrying parallels between the Spanish and U.S. mortgage markets, including their rapid growth in recent years,'' said Rui Pereira, head of Spanish structured finance at Fitch Ratings in Madrid. "Banks had relaxed lending standards in recent years due in large part to the booming housing market and abundant liquidity.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601208&sid=adT5HilcKtGE&refer=finance

-Spain's Inflated Home Values Infect Mortgage Bonds. Jose Maria Gonzalez is struggling to unload a four-bedroom apartment in Madrid so he can pay for the 480,000-euro ($750,000) house he now lives in. His problem may wind up hurting investors in Rome and Hong Kong he's never met. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ausjYI1GPoYM

-Crumbling bond market sounds distress alarm. Corporate bond investors are bracing for growing defaults and record company bankruptcies starting in 2009 as the volume of distressed debt climbs past $184 billion, an all-time high. More corporate debt is now trading at distressed levels than in 2002, when there was $165 billion of distressed corporate debt following the last bankruptcy boom, according to Moody's Investors Service data. Read more here-http://www.reuters.com/article/reutersEdge/idUSN2828966520080729

-Four big banks to kick-start covered bond market. Appearing alongside Treasury Secretary Henry Paulson, representatives of the four largest U.S. banks agreed Monday to kick-start a market for covered bonds an alternative way to provide mortgage loans in the United States. Read more here-http://www.marketwatch.com/news/story/four-big-banks-agree-kick-start/story.aspx?guid={91AC7737-BDEC-4179-B208-8345B0F1F741}&tool=1&dist=bigcharts

FANNIE-FREDDIE RESCUE

-Bush signs housing rescue law. President enacts controversial measure that aims to help borrowers, bolster the housing market and provide a fail-safe for Fannie and Freddie. Read more here-http://money.cnn.com/2008/07/30/news/economy/housing_bill_Bush/index.htm?postversion=2008073011

-Fannie, Freddie rescue won't be cheap. Experts say if the mortgage finance giants need to be bailed out, a government takeover would cost taxpayers far more than current estimates of $25 billion. Read more here-http://money.cnn.com/2008/07/30/news/economy/fanniefreddie_rescue/index.htm?postversion=2008073007

-'Stealth' Housing Bailout: It's Bigger Than You Think. With Congress on the eve of passing a historic bill that would give the Treasury a blank check to lend money to Fannie Mae and Freddie Mac, it's worth looking at how much money the government has already pumped into the system during the housing crisis.

The numbers are staggering and likely to get much larger. What we have here is, through a variety of programs, a stealth bailout where more than a trillion dollars of taxpayer guarantees have been extended to the housing market, both to keep it going and to clean up the mess from the past.

I looked at the changes over the past year to the balance sheets of four governmental and quasi-governmental agencies the Federal Reserve, the Federal Home Loan Banks, the Federal Housing Administration and Fannie Mae and Freddie Mac. The objective was to see how much additional financing they have provided to the housing market. The total: $1.43 trillion. Read more here-http://www.cnbc.com/id/25851253

-SEC Extends Ban on Shorting Fannie, Freddie. The U.S. Securities and Exchange Commission extended an emergency limit on short sales in shares of Freddie Mac, Fannie Mae and 17 brokerages as it prepares broader rules to thwart stock manipulation. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a2TrS9t34oao&refer=home

-Jim Rogers Speaks the Truth about Fannie Mae and Freddie Mac. Watch video here-http://www.youtube.com/watch?v=KY5cy7w6seY&eurl=http://goldismoney.info/forums/showthread.php?t=287292

-Ron Paul on the Housing Bill, "The Mother of All Bailouts." Three items of note, National Debt Ceiling Moved up $800 Billion, it was buried in the bill, mortgage industry workers "will now have to be fingerprinted" and All credit card transactions will now be reported to the IRS. Watch video here-http://news.goldseek.com/RonPaul/1216926862.php

FDIC-MORE U.S. BANK FAILURES-LAWSUIT

-FDIC takes over 2 more banks, closing 28 branches. The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators. The banks, owned by Scottsdale, Ariz.-based First National Bank Holding Co., were scheduled to reopen on Monday as Mutual of Omaha Bank branches, the Federal Deposit Insurance Corp. said.

The FDIC said the takeover of the failed banks was the least costly resolution and all depositors including those with funds in excess of FDIC insurance limits will switch to Mutual of Omaha with "the full amount of their deposits." The FDIC also said accountholders can access their funds during the weekend by writing checks or using ATM or debit cards. Bill Uffelman of the Nevada Bankers Association said Friday the FDIC action "is a reflection of the times for the banks. It's a poor economy." Read more here-

http://apnews.myway.com/article/20080726/D925G0B00.html or http://www.iht.com/articles/2008/07/26/business/26banks.php

-Russia Wields RICO Law Against U.S. Bank. Racketeering Law Applied In Moscow Court In $22.5B Lawsuit Against Bank Of New York Mellon. Read more here-

http://www.cbsnews.com/stories/2008/07/27/business/main4297568.shtml?source=RSSattr=Business_4297568

CITIGROUP MAY WRITEDOWN ANOTHER 8 BILLION

-Citigroup Markdowns May Rise $8 Billion, Analyst Says. Citigroup Inc. will probably write down the value of collateralized debt obligations by $8 billion in the third quarter, Deutsche Bank AG analyst Mike Mayo said, after Merrill Lynch & Co. said it will sell CDO holdings for 22 cents on the dollar.

Citigroup values the securities, mortgage-related bonds at the heart of the credit crisis, at 53 cents, Mayo wrote in a report to clients today. Citigroup has $22.5 billion of CDOs and it may have another $7 billion in writedowns to come, Mayo said. That could force it to raise more money, as Merrill did today, he said.

"The decision about raising new capital may be closer than we previously thought,'' Mayo said in the report. He also expects the bank to write down an additional $1 billion because of its $2 billion in exposure to so-called monoline insurance companies. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=au3hN1sUwXUw&refer=home

AUSTRALIAN FINANCIAL CRISIS

-Australia faces worse crisis than America. The world's financial storm has swept through Australia and New Zealand this week amid mounting signs of contagion across the Pacific region.

Financial shares were pummelled in Sydney on Tuesday of this week after investor flight forced National Australia Bank (NAB) to slash a £400m bond sale by two thirds.

The retreat comes days after the Melbourne lender shocked the markets by announcing a 90pc write-down on its £550m holdings of US mortgage debt, an admission that it AAA-rated securities are virtually worthless. In New Zealand, Guardian Trust said it was suspending withdrawals from its mortgage fund owing to "liquidity difficulties in the market".

Hanover Finance the country' third biggest operator - last week froze repayments to investors. The company said its "industry model has collapsed" as the housing market goes into a nose dive. Some 23 finance companies have gone bankrupt in New Zealand over the last year. Read more here-

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/30/cnoz130.xml&CMP=ILC-mostviewedbox

CANADIAN GDP SLOWS

-Economy shrinks by 0.1% in May. Economic activity in Canada retreated in May, as the country's gross domestic product for the month saw a surprising contraction of 0.1 per cent, Statistics Canada said Thursday. Economists had been looking for growth of 0.2 per cent for the month.

"Overall, this result is a clear disappointment, especially since almost all preliminary indications for the month pointed to modest growth," said BMO Capital Markets economist Douglas Porter. "The widespread nature of the weakness underlines the fact the economy is swimming upstream," he said. Read more here-

http://www.cbc.ca/money/story/2008/07/31/may-gdp.html

PETER SCHIFF COMMENTARY

-Peter Schiff "America is finished." When Dr. Doom speaks, we should listen. He has two words for Canadian investors thinking now is a good time to shop for bargain-priced U.S. stocks: "Stay away." Read more here-http://www.theglobeandmail.com/servlet/story/LAC.20080729.RHEINZL29/TPStory/Business

-CNBC once nicknamed me "Dr. Doom", but compared to what I see coming now, they should have then called me "Dr. Sun Shine." Peter Schiff

-With President Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie "bailout" bill is now sailing through Congress. In anticipation of its enactment, Congress had the foresight to raise the national debt limit to $10.6 trillion. Who says that politicians don't plan ahead? Read more here-http://www.321gold.com/editorials/schiff/schiff072808.html

-Peter Schiff on The Glenn Beck Show. Watch video here-http://www.youtube.com/watch?v=aHIM0Sp5epY

MAX KEISER PREDICTIONS

-Predictions. Read full story here-http://www.huffingtonpost.com/max-keiser/the-black-scholes-atomic_b_114197.html?view=print

1) The price of gold and the Dow Jones will reach parity between 4,000 and 5,000 (i.e., gold will trade between $4 - 5,000 as does the Dow Jones Industrial Average).

2) America's sovereignty, as defined as percentage ownership of American financial assets, principally U.S. government bonds (soon to no longer be rated AAA), will be mostly in the hands of foreigners.

3) China will buy Fannie Mae and Freddie Mac and in so doing become America's biggest land lord.

4) Very few of the current Bush administration, family, and close associates will be living inside U.S. borders within 6 months after leaving office.

5) The Presidential election in November will be delayed due to a global financial crisis.

6) The U.S. military in Iraq and Afghanistan will start to run out of money and be left to get out on their own resulting in American mercenaries hiring groups like the Taliban to escort them out of the region, with Bin Laden getting a commission on each deal.

7) Russia will emerge as the new power broker in a post-America world restoring financial order between America, the largest debtor in the world and China, the largest creditor in the world.

TSX FORECAST CUT-SURVIVING THE STORM-STOCK MARKET

-CIBC's Jeff Rubin cuts TSX forecast. CIBC cuts its forecast for the Toronto Stock Exchange's main index Monday, saying the waning economy coupled with high inflation in the United States will challenge "large swaths" of Canadian stocks, particularly in the automotive and transportation sectors. "The auto component of consumer discretionaries looks particularly vulnerable," said CIBC's chief strategist Jeff Rubin in a report from CIBC World Markets.

"We are also reducing our exposure to industrials, and, in particular, airlines." The "increasingly stagflationary environment" in the U.S., where inflation continues to gain pace despite anemic economic growth, led CIBC to cut its forecast for the S&P/TSX composite index to 14,300 from 15,200 to end the year. CIBC's 2009 target was also cut to 15,250 from 16,200.

Rising interest rates in the U.S. coupled with soaring energy costs and falling home values "will deal a lethal blow to the hopes for a fast bounce back in growth," in the U.S., Mr. Rubin said, adding that the American economy will continue to "walk the fine line" between growth and recession "for a fair bit longer. "That will, in turn, take a toll north of the border," he said. Nationalpost.com

-U.S. stocks and bonds haven't hit the trough yet, analysts say. For several years, Clément Gignac, chief economist and strategist at National Bank Financial, was regarded as a pre-eminent resident of the bear camp when it came to North American stocks. He edged out of that camp in January, and now after the recent pullback, he has moved even deeper into neutral territory on the U.S. stocks. However, he remains cautious on Canadian issues.

He and his associates feel that the U.S. stock and bond markets have already priced in a great deal of bad news, but at the same time, they think that "some of the ingredients of a sustainable rally are still missing." As such, he said they aren't ready yet to become "cheerleaders for U.S. equities." They maintained their 12-month target of 12,800 for the S&P/TSX composite index. Read more here-https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20080718/RGIGNAC18

-Economic trends: Surviving the storm. A new theme in investment advice seems to be that markets will be volatile in the decade ahead. The reason? A restructuring of the world order, as the United States recedes in terms of geopolitical and economic power, even as the rest of the world especially Brazil, India, China and Russia expands its footprint.

This readjustment will come at the same time as large numbers of baby boomers retire. No wonder almost no one is predicting sunny days ahead for the stock market. Read more here-

http://www.canadianbusiness.com/markets/stocks/article.jsp?content=20080818_198704_198704&page=1

-Carlyle to Shutter Blue Wave Hedge Fund After Losses. Carlyle Group, the world's second- largest private-equity firm, is liquidating its Blue Wave hedge fund after assets fell by a third during the credit-market collapse. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=asKGk..VAOx0&refer=home

CAR BIZ

-Plummeting Resale Values Lead Chrysler to End Leases. Chrysler plans to drop leasing business. A source says the automaker plans to get out of the leasing business due to losses on sport utility vehicles and pickup trucks. Read more here-http://money.cnn.com/2008/07/25/autos/chrysler_leasing.ap/index.htm or http://www.nytimes.com/2008/07/26/business/26auto.html?_r=1&partner=rssyahoo&emc=rss&pagewanted=print&oref=slogin

-GMAC Reports $2.5 Billion Loss as Auto, Housing Slump. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aaHfTZybFsV8&refer=home

-Wagoner May Say GM Lost $2 Billion on Leases for SUVs. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a1TUqyJPPdgM

-GM Plans to Keep Incentives in August on U.S. Leases. General Motors Corp. said it plans to provide auto leases with incentives in the U.S. next month through lender GMAC LLC after the finance company said it will end the offers in Canada. The so-called incentivized leases will be offered on 2008 and 2009 models in August, GM North American sales chief Mark LaNeve said in an e-mail to dealers late yesterday.

"Over the last few years and months, lease vehicles have become a smaller percentage of our sales, and we do see this trend continuing due to the relative high cost and risk'' compared with traditional incentives such as cash or discounted loans, LaNeve wrote in the memo. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=axoRD2z7LfH8&refer=home

-GM slashes another 117,000 vehicles. Latest production cuts bring General Motors' total reductions to just below the 300,000 units officials had hoped for this year. Read more here-

http://money.cnn.com/2008/07/28/news/companies/GM-cuts.ap/index.htm

STARBUCKS NOT HOT

-Starbucks Reports First Loss Since 1992, Predicts Slower Growth. Starbucks Corp., in the midst of closing 600 cafes, posted its first loss in 16 years as a public company and said it will shutter more U.S. stores than it opens next year. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZxrjcNWyi5Q

-Starbucks Cuts 1,000 Jobs; Makes Executive Changes. Starbucks Corp., the world's largest chain of coffee shops, said it was cutting almost 1,000 jobs and making additional executive changes. Martin Coles, the chief operating officer, will take over as president of Starbucks Coffee International, the Seattle based company said today in a statement released by Business Wire.

Jim Alling, the previous international chief, is leaving the company, Starbucks said. Starbucks founder Howard Schultz resumed the position of chief executive officer in January to revitalize the chain's cafes after U.S. customer visits declined and sales at existing locations slowed.

Earlier this month, he announced plans to close 600 stores in the U.S. and eliminate as many as 12,000 positions, or 7 percent of the company's workforce. Earlier today, the coffee-shop chain said it will shut three-fourths of its 84 stores in Australia within the next five days, backing away from a market it entered eight years ago. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=amz3uMc1UToQ&refer=home

-Starbucks closing 61 stores in Australia. Only 23 of the coffee retailer's cafes will remain open after the closures. Read more here-

http://money.cnn.com/2008/07/29/news/companies/starbucks_australia/index.htm

-Las Vegas's Gambling Slump Shows Why Starbucks Bubble Lost Air. The Starbucks index is pointing down in Las Vegas. The Nevada city's gambling-driven growth in the 1990s proved irresistible to Starbucks Corp., the world's largest coffee-shop chain. Las Vegas, which had no Starbucks outlets before 1995, has about 155 now, according to the store locator on the company's Web site.

Starbucks, stung by a slowdown in sales as strapped consumers shy away from $4 lattes, is staging the biggest retreat in its 37-year history, closing 600 of 11,168 U.S. company-owned and licensed stores. Las Vegas is taking the biggest hit, losing 16 of the once-trendy cafes, including in North Las Vegas, or 10 percent of its total. Los Angeles will lose just two of about 56 and New York City 10 of more than 200. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aMgeyqL6FESs&refer=home

REAL ESTATE

-Greenspan Says Housing Prices Not Yet Near Bottom. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aq_FnETHl1gM&refer=home

-IMF Says U.S. Housing Slump End `Not Visible,' Credit to Worsen. The International Monetary Fund said there's no end in sight to the U.S. housing recession and warned that deteriorating credit conditions for consumers and banks may prolong a period of slow economic growth. "At the moment, a bottom for the housing market is not visible,'' the IMF said in its Global Financial Stability Report, released today in Washington.

"Stemming the decline in the U.S. housing market is necessary for market stabilization as this would help both households and financial institutions to recover.'' The IMF, which a year ago failed to foresee the depth of the subprime mortgage collapse, stood by its April forecast for about $1 trillion in losses stemming from the U.S. mortgage crisis. While U.S. policy makers have helped contain the financial losses, ``credit risks remain elevated'' and banks need to raise more capital. Worldwide asset writedowns and losses have totaled $469 billion in the past year and $345 billion has been raised.

The Washington-based lender in the report said the Federal Reserve's decisions to expand lending to Wall Street firms ``have succeeded in containing systemic risks.'' Still, weakness in housing threatens to extend the slump. "The growing concern is that, with delinquencies and foreclosures in the U.S. housing market rising sharply, and house prices continuing to fall, loan deterioration is becoming more widespread,'' the IMF said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a3LJHMF_2I0c

-S&P/Case-Shiller May 20-City Home-Prices Fall 15.8%. Home prices in 20 U.S. metropolitan areas fell at a faster pace in May, indicating the three-year housing slump has not stabilized, a private survey showed today.

The S&P/Case-Shiller home-price index dropped 15.8 percent from a year earlier, the biggest decline since records began in 2001, after decreasing 15.2 percent in April. The gauge has fallen every month since January 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a1ikgtmfigTw&refer=home

-America's house price time bomb. With the American housing market in its worst crisis since the Great Depression of the 1930s, President Bush is authorising new legislation to pave the way for massive new government intervention designed to slow the slide. The intervention would come as a little known quirk of US law threatens to drive down house prices even faster.

Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages. In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California with money borrowed from her bank.

By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase. "I thought 'this is crazy'," Ms Trainer says. "It just does not make financial sense." Read more here-http://news.bbc.co.uk/2/hi/business/7529277.stm

-Hamptons Home Prices Fall on Wall Street Jobs, Economic Outlook. Home prices in the Hamptons, the summer haven of New York financiers and socialites, fell almost 12 percent in the second quarter from a year earlier as Wall Street firms cut jobs and the economy teetered near a recession.

Sales dropped 26 percent and the median price slid to $970,000 in the resort towns on the East End of Long Island, New York-based broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. said in a report today. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aMsrvDd4XcBg&refer=home

-U.K. Hometrack House Prices Fall the Most Since 2001. U.K. house values fell by the most in at least seven years in July and the property slump will continue for months, Hometrack Ltd. said. The average cost of a residential property in England and Wales slipped 4.4 percent from a year earlier to 168,500 pounds ($336,000), the London-based research company said today in a statement.

That's the biggest annual drop since the index started seven years ago. Prices fell 1.2 percent from June. "With no immediate end in sight to the current uncertainty, activity levels are likely to remain suppressed with prices remaining under pressure into the autumn,'' said Richard Donnell, director of research at Hometrack, in an e-mailed statement. Prices "are now back to levels last seen in October 2006.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=akr15Ku2eia8&refer=home

-Housing Slump Hits Northern Ireland Economy Harder Than Bombs. Jim Kingham says the credit crunch is hurting his Belfast-area moving company more than the violence that ravaged Northern Ireland for 35 years. Kingham has fired nine of his 12 workers at A1 Shortnotice, based in Newtownards, as house prices plunge and sales dry up.

"You can take me back to the days of the bombings,'' says Kingham, who has run A1 for 40 years. "Business was better then. Five of my six lorries haven't left the yard for months.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aATDeqyvwJkc&refer=home

FORECLOSURES-MORTGAGES

-Foreclosure filings up 120%. 220,000 homes were lost to bank repossessions in the second quarter, and the annual forecast for 2008 will have to be revised upward. Read more here-

http://money.cnn.com/2008/07/25/real_estate/foreclosure_figures_up_again/index.htm?postversion=2008072508

-U.S. Foreclosures Double as House Prices Decline. U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.

One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=adFFhHtUhCLY&refer=home

-California's Discount Foreclosure Sales Point to Housing Bottom. Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aAL047pyn7t4&refer=home

-Mortgage applications hit 2008 low. The number of new mortgages applied for fell 14.1%, according to a weekly survey from the Mortgage Bankers Association. Read more here-

http://money.cnn.com/2008/07/30/real_estate/mortgage_apps.ap/index.htm

GEOPOLITICAL

-U.S. Intel: Iran Plans Nuclear Strike on U.S. Iran has carried out missile tests for what could be a plan for a nuclear strike on the United States, the head of a national security panel has warned.

In testimony before the House Armed Services Committee and in remarks to a private conference on missile defense over the weekend hosted by the Claremont Institute, Dr. William Graham warned that the U.S. intelligence community "doesn't have a story" to explain the recent Iranian tests. Read more here-

http://www.newsmax.com/timmerman/iran_nuclear_plan/2008/07/29/117217.html

-U.S. Headed for 'Heightened Alert' Stage. Exclusive: Major Events on the Horizon Prompt a Surge in Anti-Terror Efforts. Read more here-http://abcnews.go.com/TheLaw/story?id=5420514&page=1

-Obama to House Dems: If Sanctions Fail, Israel Will Likely Strike Iran. Read more here-http://blogs.abcnews.com/politicalpunch/2008/07/obama-to-house.html

-Khamenei Says Iran Will Pursue `Peaceful' Atomic Work. Supreme Leader Ayatollah Ali Khamenei said Iran will pursue its nuclear program, days before the expiry of a deadline for the Persian Gulf country to respond to an incentives proposal in return for suspending uranium enrichment. "Iran will pursue its peaceful nuclear energy,'' state television cited Khamenei, the nation's highest authority, as saying today. ``No one can undermine the nation's attempt to progress.''

European Union and U.S. diplomats discussed the international dispute over the atomic work with an Iranian delegation in Geneva on July 19, and gave Iran two weeks to respond to the offer of economic and diplomatic incentives. It was the highest-level meeting between American and Iranian officials since the 1979 Islamic revolution. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aWhgXVQb.Apw

-Iran Not Building Nuclear Bomb, Ahmadinejad Tells NBC. Iranian President Mahmoud Ahmadinejad told NBC News that Iran isn't developing nuclear weapons and the country would respond positively to a new approach from the U.S. "We are not working to manufacture a bomb,'' NBC's Brian Williams quoted Ahmadinejad as saying following an interview with the president in Tehran. "Nuclear weapons are so 20th century,'' NBC cited him as saying. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=agN336SOksKw

-Ahmadinejad Condemns World Powers for Atomic Arsenals. Iranian President Mahmoud Ahmadinejad criticized the world's most powerful countries for expanding their atomic arsenals while attempting to stop the progress of other nations toward "peaceful nuclear energy.''

"The expansion of nuclear arms by oppressing powers is continuing and other nations" peaceful nuclear activities are being condemned by these very countries through accusations that they are being aimed at constructing nuclear weapons,'' Ahmadinejad said in a speech aired live on state television. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=axm30fxCXRgc

-Iranian president: 'Big powers' going down. Read more here-http://ap.google.com/article/ALeqM5hyEZXokcOdqqOX2Ci-Xrp8xvORqAD927H0D00

-Syria Wants Peace Deal With Israel, Ambassador Says. Syria is serious about seeking peace with Israel in exchange for the return of the Golan Heights, said its U.S. ambassador, the strongest signal of Syrian interest in reaching a deal with its enemy of six decades. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ae38guTvSBE0

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The GoldBugg Report - August 05, 2008
Posted by Worldwide Precious Metals on Tuesday, August 05, 2008

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